Retiring in Alabama: how your income is taxed
Alabama is fairly tax-friendly for retirees. On a typical retirement income it ranks #24 of 51 for the lowest state income tax.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
The rules in Alabama
- Social Security: Social Security benefits are fully exempt from Alabama income tax.
- Pensions: Payments from defined benefit pension plans (IRC 414(j)), private or public, are fully exempt at any age (Ala. Admin. Code 810-3-19-.04). Government pensions (state TRS/ERS, federal civil service) are also exempt. Pensions that are defined contribution plans do not qualify and fall under the $6,000 age-65 exclusion.
- 401(k), 403(b) and IRA withdrawals: 401(k), IRA and other defined-contribution withdrawals are taxable, but at 65 and older each person can exclude the first $6,000 a year of this retirement income (in effect since 2023). A 2025 bill (HB 388) to raise this to $12,000 for 2026 died in committee, so $6,000 still applies.
Calculate your Alabama retirement taxes
State income tax in Alabama: $218 a year
In Alabama, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Local income taxes are not modeled here, except the approximate statewide-average county rates included when you select Maryland or Indiana.
In Alabama you'd pay about $218 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,446 (6.5% total).
Alabama ranks #24 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Alabama
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 traditional IRA withdrawals | $50 | $0 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $218 | $0 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $1,469 | $1,426 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. State estimates apply Alabama's main exclusions and may differ for income-tested credits.
Lower-tax states for the age-67 example
The amounts below use the fixed example above. Comparison links carry the last valid household entered in the calculator, including each spouse's income and age; the destination recalculates that household. Finish correcting invalid entries before using a comparison.
Moving to Alabama in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Alabama come from (IRS migration data, 2022–2023).
- Georgia to Alabama
- Florida to Alabama
- Tennessee to Alabama
- Texas to Alabama
- Mississippi to Alabama
- California to Alabama
Frequently asked questions
Does Alabama tax Social Security?
Not taxed. Social Security benefits are fully exempt from Alabama income tax.
Does Alabama tax pensions?
Not taxed. Payments from defined benefit pension plans (IRC 414(j)), private or public, are fully exempt at any age (Ala. Admin. Code 810-3-19-.04). Government pensions (state TRS/ERS, federal civil service) are also exempt. Pensions that are defined contribution plans do not qualify and fall under the $6,000 age-65 exclusion.
Does Alabama tax 401(k) and IRA withdrawals?
Partly taxed. 401(k), IRA and other defined-contribution withdrawals are taxable, but at 65 and older each person can exclude the first $6,000 a year of this retirement income (in effect since 2023). A 2025 bill (HB 388) to raise this to $12,000 for 2026 died in committee, so $6,000 still applies.
Is Alabama a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals, Alabama charges about $218 in state income tax, ranking #24 of 51 (lowest tax first).
Related
Sources: admincode.legislature.state.al.us, aarp.org. Rules reviewed .